Thousands of student-loan borrowers got their debt wiped through a new repayment reform. 11 GOP states just filed a lawsuit to block that relief.

Thousands of student-loan borrowers got their debt wiped through a new repayment reform. 11 GOP states just filed a lawsuit to block that relief.
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Joe Biden
President Joe Biden listens during an event at the Eisenhower Executive Office Building at the White House on October 23, 2023.

  • Eleven GOP state attorneys general filed a lawsuit to block the SAVE income-driven repayment plan.
  • They argued that the shortened timeline for debt relief through the plan is unconstitutional.
  • An Education Department official said Congress allows the authority to set terms for income-driven repayment. 

The lawsuits to block President Joe Biden’s student-debt relief efforts are back.

On Thursday, 11 state attorneys general — led by Kansas’ Kris Kobach — filed a lawsuit to block Biden’s SAVE income-driven repayment plan, implemented over the summer to give borrowers cheaper monthly payments with a shorter timeline for relief.

The lawsuit, filed in Kansas’ district court against Biden and Education Secretary Miguel Cardona, stated that the “lawsuit is now necessary to prevent Defendants from continuing to flout the law, which includes ignoring Supreme Court decisions,” referring to the high court’s decision at the end of June to strike down Biden’s first attempt at broad student-loan forgiveness using the HEROES Act of 2003.

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“Once again, the Biden administration has decided to steal from the poor and give to the rich,” Kobach said during a Thursday press conference. “He is forcing people who did not go to college, or who worked their way through college, to pay for the loans of those who ran up exorbitant student debt. This coalition of Republican attorneys general will stand in the gap and stop Biden.”

Last month, the Education Department implemented a provision of the SAVE plan ahead of schedule: $1.2 billion in debt relief for 153,000 borrowers who originally borrowed $12,000 or less and made as few as 10 years of qualifying payments. The lawsuit argued that the relief was “in defiance of the Supreme Court” and asked the federal court to declare the SAVE plan unconstitutional and require borrowers to make payments.

An Education Department official told Business Insider that while the department does not comment on pending litigation, “Congress gave the US Department of Education the authority to define the terms of income-driven repayment plans in 1993, and the SAVE plan is the fourth time the Department has used that authority.”

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“From day one, the Biden-Harris Administration has been fighting to fix a broken student loan system, and part of that is creating the most affordable student loan repayment plan ever that is lowering monthly payments, protecting millions of borrowers from runaway interest and getting borrowers closer to debt forgiveness faster,” the official said. “The Biden-Harris Administration won’t stop fighting to provide support and relief to borrowers across the country — no matter how many times Republican elected officials try to stop us.” 

While the lawsuit makes several comparisons to the debt relief plan the Supreme Court struck down, the legal basis for the two plans differ. Biden’s first attempt at broad student-loan forgiveness would have canceled up to $20,000 in debt for borrowers making under $125,000 a year using the HEROES Act — a law that allows the education secretary to waive or modify borrowers’ balances in connection with a national emergency, like a pandemic.

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The SAVE plan, on the other hand, went through a process mandated by the Higher Education Act known as negotiated rulemaking, which requires negotiations with stakeholders and public comment before its final implementation. The Education Department is currently undergoing the negotiated rulemaking process for its second attempt at a broader form of debt relief.

The Education Department has not yet filed its response to the lawsuit. For now, borrowers who received relief through SAVE are not impacted, and enrollment in the plan can continue.

Read the original article on Business Insider


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